Atlas First Quarter 2015 Review

Report for the Quarter Ended March 31, 2015

In the first quarter of 2015, Atlas and its portfolio companies made significant progress in completing new transactions and improving existing operations.

In March, we acquired Merchants Metals Inc. (“MMI”) from Oldcastle Building Products Inc. (“Oldcastle”), the U.S. holding company of CRH Inc. MMI is the second largest manufacturer and distributor of fencing products and accessories in the United States, with five manufacturing facilities and 39 distribution centers. It was viewed as non-strategic by Oldcastle and performance had suffered, creating the opportunity to acquire the business at a discount to net working capital. With a new leadership team in place, including CEO Andrea Hogan and COO Jeff Matuszak, we are optimistic that MMI will be a significant contributor to Atlas Holdings. MMI will operate as a sister company of Bridgewell Resources Holdings LLC (“Bridgewell”) under the Guardwell Distribution LLC (“Guardwell”) platform.

In April, we established Novipax Holdings LLC (“Novipax”) through the acquisition of the Trays and Pads business of Sealed Air Corporation (“Sealed Air”). Novipax is the leading producer of pads and one of the top three manufacturers of EPS (expanded polystyrene) trays in the U.S., serving more than 150 food processors, supermarkets and food packaging distributors from its five manufacturing facilities. The business was marked for divestiture because Sealed Air no longer considered it strategic as its food packaging division is increasingly focused on flexible packaging solutions. The business will be run by a new leadership team, led by CEO Bob Larson and CFO Don Eldert. We are focused on executing a complex carve-out to transition Novipax into a standalone business.

We also completed a Bolt-on Acquisition (“Bolt-on”) for Motus Integrated Technologies (“Motus”), acquiring Leon Plastics Inc. (“Leon”) in February. Leon is a premier supplier of highly engineered, decorative soft-trim interior components, including door and console armrests, instrument panel trim, interior handles and other decorative interior components.

In March we announced the sale of New Wood Resources LLC’s (“New Wood Resources”) Olympic Panel Products division (“Olympic”) to Swanson Group Manufacturing LLC. Olympic’s facility lease was approaching its termination date and the company was seeking a new location, which would have necessitated a move and potentially the construction of a new specialty plywood facility. Rather than incurring the capital cost and bearing the risk of such an undertaking, we elected to sell Olympic to a strategic buyer.

These transactions in the first quarter took place even as we continued to work hard to absorb and transform newly acquired Motus and Aludium LLC (“Aludium”) and continue operational improvements within the rest of the portfolio as described herein.

Safety performance across each of our platforms remains the highest priority for all of us at Atlas as well as that of our management partners. The first quarter of 2015 presented mixed results; many companies realized continuing improvements in safety metrics, others faced seasonal and site-specific challenges and several new members of the Atlas family began their journeys on the path to safety excellence. Across the portfolio, safety metrics remained similar to trailing twelve month performance.

In a few of our businesses, including BF Holdings LLC (“BFH”), Detroit Renewable Energy LLC (“DRE”), Finch Paper LLC (“Finch”), Forest Resources (“Forest”) Pangborn Group (“Pangborn”), Phoenix Services International, LLC (“Phoenix”) and Twin Rivers Paper Company Inc. (“Twin Rivers”), the signs of vitality are fully evident in the form of continuing solid results or improved financial performance over prior periods. In others, such as ASG Group (“ASG”), Erickson Framing Holdings LLC (“Erickson”), New Wood Resources LLC (“New Wood”) and RedBuilt LLC (“RedBuilt”), tangible evidence of progress are harbingers of improving financial performance yet to come. At Soundview Paper Holdings LLC (“Soundview”) a number of critical KPIs demonstrated improving operational trends by the end of the quarter, providing confidence that the turnaround of this platform is well underway.

We are off to a solid start in 2015. We continue to identify opportunities to deploy additional capital, either to acquire Bolt-ons or for organic growth, which we believe will enhance our companies’ returns. We look forward to reporting continued progress as the year unfolds.

Andrew Bursky
Managing Partner
To contact Andy by e-mail, please click here

Timothy Fazio
Managing Partner
To contact Tim by e-mail, please click here



Arnaud de Weert
Chief Executive Officer

In December 2014, Atlas Holdings acquired Aludium LLC (“Aludium”), the rolling mill assets of Alcoa Inc. located in Spain and France. Aludium is an integrated, midstream aluminum system with casting, hot mill, cold mill and finishing capabilities producing coils, sheets, shates and strips for the distribution, building and construction, beverage closure, cosmetic, decorative, foil and other industrial end markets. Aludium operates out of three manufacturing locations in Amorebieta, Spain, Alicante, Spain, and Castelsarrasin, France. In addition to the manufacturing sites, Aludium operates a state-of-the-art research and development center located in Cindal, Spain, adjacent to the Alicante facility.

In the first quarter of 2015, Aludium displayed excellent safety performance, posting an RIR of 1.2. We are still in the process of “carving out” Aludium from Alcoa and, as a result, the company incurred significant non-recurring costs in the first quarter. We expect that these carve-out expenses will continue throughout the year.

Aludium made significant strides across a number of key functional areas in its first quarter as a stand-alone enterprise. Led by CEO Arnaud de Weert, a former executive of Constellium and Novelis (two of the largest aluminum companies in Europe) and COO Manuel Ruano, the former head of European Aluminum Rolled Products Operations for Alcoa, the team implemented a challenging “Day One” transition under tight timeframes over the year-end holidays. As the key measure of Day One effectiveness, Aludium did not lose any customers during the transition. The first quarter performance demonstrated the market acceptance of the new company, with volumes up by 2,500 metric tons relative to the first quarter of 2014.

Over the coming months, Aludium’s management team will be focused on rolling off the Transition Services Agreements with Alcoa, which will primarily involve a number of IT-related investments and implementations. Additionally, the team will be working on the installation of its financial reporting processes as a standalone company in preparation for a recapitalization which will provide expanded working capital financing. We also anticipate that over the coming months, Aludium’s margins will benefit on a lagged basis from recent declines in regional aluminum premiums. Longer term, the management team will be focused on lowering and diversifying metal costs through strategic sourcing and investment.



Mike Jackson

ASG operates as two separate packaging businesses which both service the consumer products and electronic media industries: Amaray, a provider of plastic injection-molded packaging, operates four manufacturing facilities located in the U.S. and Europe and employs approximately 340 associates; and ASG Print, a provider of creative services and folding carton packaging, operates six manufacturing facilities in Europe and employs approximately 1,000 associates. We formed ASG by acquiring the AGI media packaging business of MeadWestvaco Corporation in September 2010 and merging it with the Shorewood Packaging business purchased from International Paper Company (“IP”) in December 2011. IP is our partner through its 40% ownership stake in the non-U.S. portion of ASG.

ASG performed well both in regard to operating and safety metrics in the first quarter of 2015. Amaray experienced a decline in profitability caused by higher costs on a lower revenue base, while ASG Print delivered increased profitability despite a decline in sales, driven by cost reductions executed during 2014 and the first quarter of 2015. On the safety front, ASG achieved an aggregate RIR of 0.3 in the first quarter of 2015, as compared to 0.5 during the LTM period ended March 31, 2015.

Amaray’s decline in revenue was driven primarily by the European operations, which were impacted by translation losses from the weakening Euro and contractually-mandated price reductions related to resin cost decreases. Revenues in the U.S. were impacted by soft games and Shellpak (healthcare packaging) demand, but these declines were largely mitigated by strong DVD and Blu-ray volumes uncharacteristic for this time of year and the launch of new products, including propagation trays for the agricultural market. Amaray continues to make significant progress in building its consumer packaging and specialty industrial packaging business, such as the propagation trays, to offset declining media packaging sales. In addition to declining revenue, Amaray’s profitability was impacted by higher allocated SG&A costs that were historically borne by ASG’s corporate organization.

ASG Print generated significantly improved adjusted EBITDA during the first quarter of 2015 compared to first quarter of 2014. The decline in revenue was driven primarily by lower entertainment media volumes in Poland, sales losses from the closure of the Thalgau, Austria facility and the weakening Euro. However, ASG Print was able to generate significantly higher adjusted EBITDA as a result of cost savings from restructuring actions. The Thalgau facility closure, which was announced in December 2014, has been largely completed, additional headcount reductions in the U.K. have been executed with no disruptions to production, and the quality and design departments in the Netherlands have been restructured. After several years of effort, ASG Print has achieved its objective of balancing capacity with the realities of declining demand for media packaging. The company is now positioned for sustained profitability, as evidenced by the very modest loss in the seasonally weakest first quarter. Further, additional actions to consolidate production in Poland, including the relocation of the Torun facility into the Bydgoszcz operations acquired last year from MeadWestvaco, as well as the transfer of a press from the Thalgau facility to Bydgoszcz, should enable improved profitability in quarters ahead.



Don Banker
Chief Executive OfficerBanker Steel

Henrik Krabsen Jensen
Chief Executive OfficerVeritas Steel

In November 2013, BF Holdings LLC (“BFH”) foreclosed on certain of the operating assets of PDM Bridge, LLC (“PDM”) at which time BFH commenced operations as newly-formed Veritas Steel LLC (“Veritas”), a wholly-owned subsidiary of BFH. Veritas is a leader in the steel bridge fabrication industry with extensive experience in the manufacture of highly complex bridge structures. Veritas produces a complete line of bridge structures ranging from simple plate girder bridges commonly found in highway overpasses and interchanges to complex bridges such as arch, bascule (drawbridge), cable-stayed, lift, railroad, suspension and truss designs. Veritas has two facilities located in the Midwest and one in the Southeast. The company’s three plants enjoy close proximity to major rail, highway and waterway transportation, providing effective access to the eastern half of the United States for bridge contracts. In July 2014, BFH acquired Banker Steel Co., L.L.C. (“Banker Steel”). Banker Steel is a full-service fabricator of structural steel components used in commercial and infrastructure projects. Banker Steel operates out of two fabrication facilities in Lynchburg, VA and one in Orlando, FL. Through these transactions, BFH has become a national leader in bridge and structural steel fabrication with over 1 million square feet of fabrication workspace, six locations and over 600 employees.

BFH began the year with strong financial performance but disappointing safety results. In the first quarter of 2015, Veritas reported an RIR of 9.0 and a 6.6 for the trailing twelve months. The first quarter degradation in safety performance is attributable to a labor force ramp up at all three Veritas facilities. The majority of incidents involved new hires within four months of their start date. However, the root cause of the disappointing safety performance is an inadequate onboarding process for new hires with respect to safety training and expectations, and Veritas is working to significantly improve the onboarding process. Banker Steel continues to struggle with safety, showing only modest improvement. The company reported an RIR of 13.7 for the first quarter compared to 14.6 for the trailing twelve months. Banker Steel has formalized a near miss reporting system, an important step to raise safety awareness. Banker Steel has also established safety action teams to review critical near misses and other safety related incidents.

Veritas’ strong operating performance in the first quarter was driven by increased volume and efficiency gains in all three facilities. Banker Steel has kept costs in check and maintained margins, despite a relatively soft start to the year. Both companies continue to add higher margin business to backlog and win key new projects. Notably, Banker Steel recently landed the Orlando Soccer Stadium project, a particularly noteworthy win as it enables the company to fill production capacity in the still slow Florida operations.

We remain excited about the synergistic opportunities between Banker Steel and Veritas. During the first quarter, the companies began working together on a job in Florida that should begin fabrication early in the second quarter. Our management teams are operating well, sharing best practices and discussing safety and employee engagement. With a strong balance sheet and an energetic leadership team, BFH is well-positioned for future growth.

In the first quarter, Tracy Glende, Veritas President and CEO, notified us that he would be forced to step down during the second quarter for family health reasons. While we are disappointed to lose Tracy, he will retain his seat on the Board of Managers and will remain an investor in BFH. Henrik Jensen, currently Chairman of BFH and an Atlas Operating Partner, will assume the role of interim Veritas CEO as we commence a search for Mr. Glende’s replacement.



Steve White
Chairman and Chief Executive Officer

DRE consists of four operating units, three of which were acquired through simultaneous transactions on November 15, 2010 and a fourth which was created in 2012 to leverage the DRE infrastructure. The operating units of DRE are (i) Detroit Thermal, LLC (“DT”), a district heating business which provides efficient heat to approximately 145 buildings in the Detroit central core; (ii) Detroit Renewable Power LLC (“DRP”), an EFW (energy-from-waste) facility that processes up to 3,500 tons per day of municipal solid waste (“MSW”) (including most of the solid waste generated in Detroit) which is shredded and then burned, the heat value of which is used to produce electricity which is sold to Detroit Edison and steam which is sold to DT; (iii) Detroit Renewable Cooling LLC (“DRC”), DRE’s subsidiary created to provide district cooling services to buildings in the City of Detroit and (iv) Hamtramck Energy Services (“HES”) which provides operating and maintenance services to industrial customers, including several General Motors plants, primarily in the Detroit area. DRE is committed to providing the City of Detroit and surrounding municipalities with safe, reliable and cost-effective solutions for clean energy and waste disposal, utilizing its essential (and irreplaceable) infrastructure assets.

The first quarter of 2015 represented the third successive quarter of improved financial performance for DRE as well as a continuation of exceptional safety results. During the first quarter, DRE had no recordable incidents across its business units, a third successive quarter of zero incidents, which resulted in an RIR of 0.0 for the first quarter of 2015 and an RIR of 0.7 over the last twelve month period. We are very pleased to see this continuation of world class safety performance at DRE while operating in an environment that is inherently hazardous.

DRE’s positive quarter-over-quarter EBITDA improvement in the seasonally most profitable quarter was achieved on substantially similar revenues, evidencing the “bottom line” impact of operational stability at Detroit Renewable Power (“DRP”). Having completed a significant portion of our capital spending program in 2014, including the replacement of a majority of the critical waterwall sections and primary superheaters of all three boiler units, DRP enjoyed relatively uninterrupted “clean runs” without significant unplanned downtime during the first quarter of 2015. Notwithstanding accelerating financial performance, our management team continues to identify opportunities for refinement in its operating model, including contract pricing modifications with customers and suppliers which are only now accessible as a result of more consistent operating performance.

As we advised in the second quarter of 2014, odor complaints filed with the Michigan Department of Environmental Quality (“MDEQ”) resulted in the MDEQ issuing a number of NOVs (Notices of Violation) to DRP. During the third quarter of 2014, DRP, MDEQ and the Attorney General agreed to an approach to resolve the violations, memorialized in a consent judgment, which requires DRP to install additional environmental control equipment by the end of 2015. Through the first quarter, all milestones have been achieved and management devoted significant attention to the safe and conscientious operation of DRE’s facilities.

Detroit Thermal (“DT”) delivered solid results in the critical first quarter. During the first and fourth quarters, DT typically demonstrates its strongest financial performance due to the highly seasonal nature of this business. DT’s three most critical KPIs are i) units of steam (measured in “Mlbs”, or thousands of pounds of steam) purchased vs. produced (a measure of the reliability of DRP as a steam source), ii) HDD (Heating Degree Days, a measure of steam demand for heating) and iii) Mlbs sold (a function of HDD and the number and scale of customers). The first KPI drives overall DRE system efficiency and is a fundamental determinant of DRP profitability (when combined with DRP steam sold to GM). During the first quarter of 2015, DT was required to self-generate 45% of its steam requirements using natural gas as compared to 41% in the first quarter of 2014, when there were no DRP GM steam sales. In the fall and winter as the weather turns colder, DT customer demand and GM steam sales intermittently exceed DRP’s capacity, requiring substantially more self-generation at DT. The HDD KPI is outside of the control of our managers; however, this KPI can often create substantial variability in our quarterly results. For the first quarter 2015, the HDD in Detroit was 5% warmer than the first quarter of 2014 HDD. The third KPI can be directly impacted by management; however, switching to the DT system is influenced by the cost of natural gas. Most typically, these prospects are buildings that are facing major capital expenditures to replace aging boilers as well as new construction. There were no new customer additions in the first quarter.



Rich Gallagher
Chief Executive Officer

Erickson is a leading construction services and prefabricated building products company that provides turnkey framing services, framing packages, trusses and other products to builders and developers. The company’s primary geographic markets include Arizona, Northern California and the greater Reno, NV area. Atlas formed Erickson by acquiring Erickson’s core assets from Masco Corporation on October 19, 2012.

Erickson showed significant financial and safety performance improvement in the first quarter of 2015. The company reported an RIR of 5.9 in the first quarter, and an LTM performance of 9.0. Erickson’s RIR was well over 20.0 before the Atlas acquisition, and we expect improving safety trends to continue. This was Erickson’s first positive EBITDA Q1 in seven years.

Arizona Framing (“AZ Framing”) continues to face a slower than anticipated housing market. In early April, the market is beginning to show signs of thawing and management is currently focused on building its labor force for the anticipated growth in builder releases. We believe AZ Framing is well-positioned for the seasonal uptick in demand.

The California Framing division (“CA Framing”, which includes the Nevada Framing operations) had impressive results in the first quarter. Consistent with prior quarters, Nevada Framing continued to generate steady positive EBITDA. Given the weak performance of Nevada Framing in the years prior to Atlas’ acquisition of Erickson, we had ascribed minimal value to this operation. The Reno market has been solid and recent announcements of high-paying jobs coming to Reno (e.g. a new Tesla battery factory) will continue to provide positive momentum. In the quarter, the Sacramento division provided the majority of the profits. Pricing was stronger than anticipated and new leadership continues to rebuild market share. Like AZ Framing, CA Framing is well-positioned for the seasonal pickup. Erickson’s door molding and millwork business (“DSI”) is co-located with AZ Framing. DSI reported a profitable first quarter. DSI experiences a different seasonal cycle than the other divisions and serves as a nice stabilizer during the seasonal slowdown in the framing divisions.

An important management transition occurred during the quarter as Bob Quinonez, affectionately known as “BQ”, stepped down as CEO. BQ led Erickson for decades and agreed to join us as CEO upon acquisition, leading the critical transformation of the business during the challenging post housing crash period. We are pleased that BQ will remain active with us in his new role as Chairman of the Board. Previous Erickson CFO, Rich Gallagher, has taken over as CEO. Rich has shown his ability to lead Erickson during his tenure and we are excited to help him take the company to the next level.



Deba Mukherjee
President and Chief Executive Officer

In June 2007, Finch Paper LLC (“Finch”) was formed to acquire the assets of Finch, Pruyn & Co. The predecessor company was founded in 1865 as a sawmill, lumberyard and quarry operation on the upper Hudson River and began papermaking operations in 1905.

Finch Paper reported a recordable rate of 3.1 for Q1 2015, essentially flat with the RIR for the last twelve months. Our lost time incident rate (LTIR) for Q1 2015 was 2.2 versus a year-end rate of 1.1 in 2014. To immediately improve our results, we have implemented a series of awareness and compliance initiatives which include, i) safety intervention workshops for new/high risk employees and ii) a 360° safety observation program for all employees. The programs will emphasize on-the-floor engagement rather than policy development and engage all employees on a daily basis.

Market conditions remain soft as North American distributors and printers continue to consolidate. Structural demand in the uncoated free sheet market declined in the first quarter and, excluding an extra week of shipments in FY 2015, Finch shipments decreased. However, preliminary market data for March indicated an improvement over February and the highest level of shipments in 12 months. The quarter ended with industry utilization rates down 1% versus last year.

Despite weaker than projected market conditions, our financial performance is much improved over prior year’s results. Financial results reflected solid operational performance as paper mill production and pulp mill production was consistent with Q1 of the prior year. Our customer diversification efforts continued to have a positive impact as selling price for the quarter increased over Q1 2014. We continue to realize the benefits of our recent actions to expand our product portfolio and remain disciplined on pricing. Performance was also improved in the quarter by energy conservation efforts and a fixed-price natural gas election. Operations of Finch Waste Co LLC, our municipal solid waste landfill, made their first significant financial contribution during the quarter. Since inception in Q3 2014, revenue streams from solid waste have experienced steady growth for three consecutive quarters.

Q1 2015 represented the 5th consecutive quarter of trailing twelve month EBITDA growth driven by our focus on safety, quality, productivity and sales diversification. The first quarter of 2015 was our strongest Q1 financial performance since 2011, and Finch remains focused on leveraging its mill-wide continuous improvement plan to continue the momentum through the remainder of the year.



Larry Richard
President and Chief Executive Officer

Forest Resources LLC is a holding company engaged in manufacturing industrial packaging product, including recycled corrugated medium, kraft, crepe and specialty packaging papers as well as corrugated boxes. In March 1999, Forest was formed with the acquisition of Hartford City Paper. Today, Forest employs 630 people and generates revenues from six facilities across North America.

Forest Resources’ safety metric, DART (Days Away/Restricted/ Transferred) rate for Q1 2015 was 0.6 compared to the 1.8 industry average. Forest’s Total Recordable Rate for Q1 2014 was 1.4 compared to the 3.1 industry average. This quarter’s safety performance indicated success from continued communication efforts as we increased focus on safety awareness and culture during the difficult winter months.

Financial performance at Forest was positively impacted by higher operating rates and lower production costs, resulting in significantly improved performance for Q1 2015 compared to Q1 2014. Hartford City Paper’s production declined slightly during the first quarter compared to the first quarter of 2014, as the mill worked to stabilize effluent challenges. Production volume at Ivex Specialty Paper (“Peoria”) increased in the first quarter, including for Peoria’s primary product, crepe paper for the sewn bag industry. Shillington Box sales were consistent with prior years while selling prices remain under pressure in the competitive St. Louis area box market.

The North American folding carton market strengthened somewhat in the first quarter of 2015, as evidenced by increasing mill order backlogs. The Canadian market got an additional boost from the weakening Canadian dollar, improving their competitive position relative to US based companies. Strathcona Paper’s production and sales volumes were up in Q1 2015 compared to Q1 2014 due to fewer operational problems and less downtime from paper machine drives, the first half of which were replaced late in Q1 2014. Improved runability, less downtime and lower energy and maintenance costs resulted in significantly higher EBITDA for Q1 2015 compared to Q1 2014. Q1 sales volumes and net revenues at Boehmer Box are up year-over-year. The first quarter has seen very competitive quoting for large blocks of business. Overall, higher sales volumes, currency exchange rates and lower production costs continue to benefit Boehmer Box.

Forest EBITDA for Q1 2015 increased compared to Q1 2014. Sales were slightly down in Q1 2015 compared to in Q1 2014. The year-over-year increase in EBITDA was primarily attributable to operational improvements at Strathcona Paper, lower costs for energy, maintenance, and freight, along with lower fiber costs for OCC.

Containerboard markets are softening slightly with some new capacity already in the market. Fiber prices are expected to seasonally rise during the second quarter. While the waste paper export market remains soft due to China’s uncertain demand, new containerboard capacity is impacting waste paper pricing regionally.



Dale Irwin
President and Chief Executive Officer

On February 28, 2014, a newly formed Atlas entity, Greenidge Generation Holdings LLC (“Greenidge”), completed the acquisition of Greenidge Generation LLC (f/k/a GMMM Greenidge, LLC) and Lockwood Hills LLC (f/k/a GMMM Lockwood, LLC). Greenidge is a 104MW coal-fired power plant that was idled during the bankruptcy of AES Corporation.

Greenidge Generation Holdings LLC (“Greenidge”) remains idled, but discussions with the New York Department of Environmental Conservation and the Governor’s Office concerning our restart plans picked up in the first quarter. Management remains focused on reinstating the facility’s Title V air permit, which would allow Greenidge to restart in a coal-fired configuration. We will continue to explore all possible generation permutations to maximize value as we work to return a strategically significant power source to market.



Pat McCauley
President and Chief Executive Officer – Bridgewell Resources

Andrea Hogan
President and Chief Executive Officer – Merchants Metals Inc.

Guardwell Distribution LLC has two divisions, Bridgewell Resources (“Bridgewell”) and Merchants Metals Inc. (“MMI”). Bridgewell supplies a variety of construction products, utility supplies, wood products, food ingredients and crop inputs, together with logistics services, to suppliers and customers globally. Bridgewell commenced operations on March 1, 2010, when it acquired certain assets of the Trading Division of North Pacific Group Inc. out of a Federal receivership. On March 23, 2015, Guardwell acquired MMI from Oldcastle Building Products Inc., the U.S. holding company of CRH Inc. MMI is the second largest manufacturer and distributor of fencing products and accessories in the United States, with five manufacturing facilities and 39 distribution centers.

In the first quarter of 2015, the company experienced its first recordable incident in more than a year leading to an RIR of 2.1 for the quarter and a TTM RIR of 0.5. Revenues were down relative to the prior year and gross profit decreased.

The reduced revenues were largely attributable to a decline in sales of the Mats Division (“Mats”) and in sales of the Contractor Direct Division (“CD”). Mats has faced significant headwinds due to industry weakness as a result of declining exploration and development in the domestic oil and gas industry. As a result, Bridgewell is in the process of restructuring the division’s go-to-market strategy. The decline in sales in CD is largely attributable to worse than normal winter weather in large areas of the country which reduced construction activity. However, quoting and booking activity increased substantially in the first quarter; resulting in an increase in CD backlog relative to one year ago.

Gross profit for the first quarter suffered as a result of the shortfall in sales as well as a slight compression in gross profit margin relative to the prior year. The margin percentage decline is largely attributable to a shift in mix in the Utility and Construction Division (“U&C”) as the division’s railroad tie sales increased. In addition, the Food and Agriculture Division (“F&A”) experienced margin compression in the first quarter as a result of demurrage charges related to West Coast port shut downs on imported products.

In the first quarter, Bridgewell added eight sales associates and lost or terminated fifteen, bringing the total number of sales associates to 101 as of March 31, 2015. “Sales in Backlog”, a KPI used to track near-term revenue trajectory as well as sales associate activity, increased relative to the prior year. A bright spot in the first quarter, Bridgewell ended the quarter with Sales in Backlog increased from the first quarter of 2014. The increase in backlog is largely attributable to i) the rapid growth of the coconut oil business in F&A and ii) the significant increase in CD bookings as a result of increased demand and the addition of new and productive sales associates.

Bridgewell is in the process of several endeavors to both strengthen its core businesses and turn around its underperforming businesses. In addition, Bridgewell is examining the ability to optimize freight expenditures to drive cost savings. We are excited to share our progress with you in the balance of the year. Regarding MMI, the business was acquired at the end of the quarter and the transition to Guardwell ownership has proceeded well. We look forward to reporting on progress at MMI in next quarter’s report.



Shannon White
Chief Executive Officer

Motus is a leading global manufacturer of automotive headliners and a variety of unlit, illuminated and auxiliary coverage sun visors operating out of plants in the U.S., France, Mexico and Germany. The company has longstanding customer relationships with some of the world’s leading automotive OEMs, including BMW, Daimler, Ford, General Motors, Honda and Volkswagen. In February 2015, Motus acquired the assets of Leon Plastics, Inc. (“Leon”). Leon is a premier supplier of highly engineered automotive decorative soft interior trim components, including door and console armrests, instrument panel trim, interior handles and other decorative interior components with one manufacturing facility in Grand Rapids, MI and three manufacturing facilities in Mexico. Leon supports a wide range of automotive OEMs, including BMW, Chrysler, Ford, General Motors, Honda, Hyundai, Mercedes Benz, Nissan and Toyota. The data below relates to Motus exclusive of Leon, which operated for only one month as a Motus-owned business.

Motus delivered solid safety performance during the first quarter, reporting an RIR of 0.9 compared to a rate of 0.7 during the six months of our ownership in 2014. Uberherrn had the most disappointing performance while Ramos achieved a noteworthy zero recordable incidents during the quarter. Management remains intensely focused on safety and has implemented several actions at all of the facilities to drive continued improvement in Motus’ world class safety performance.

Financial performance was better than expectations, driven by strong sales with Daimler in Europe as well as the benefits of continued operating improvements at all four plants. High industry-wide auto production volumes helped as well. The strong results were achieved even as significant time and energy were consumed by continuing JCI “carve-out” activities, including building up of standalone infrastructure and preparing for the IT and ERP migrations that will occur during the second and third quarters, as well as the integration of Leon.

Motus had a mixed quarter on the commercial front. The company won two important programs; the Opel Zafira headliner in Uberherrn and the VW T6 headliner and visor in Uberherrn and Creutzwald. In addition, Creutzwald was selected to begin producing a new “alternative” automotive engine filter, leveraging the company’s significant expertise in high frequency welding. This new program expands Creutzwald’s product offering and will provide an important new cash flow stream.

As noted, Motus completed a transformational acquisition during the first quarter when it acquired the business of Leon. The acquisition adds to Motus a complementary automotive interior components business with substantial long-term synergy potential. A number of critical business stabilization activities took place at Leon immediately after closing as the company had been in a prolonged liquidity crunch and state of operational stress for several months prior to closing. The leadership team has made a number of important changes, including transitioning out the former CEO and CFO, negotiating settlements with vendors, implementing controls and business processes that had been lacking under prior ownership and recruiting additional resources to supplement the existing Leon team and drive process improvements. Several key hires have recently been made including a permanent Chief Integration Officer, Tom Worswick, a new CFO, Tim Heasley, and several supporting finance and operations professionals. One important measure of the confidence instilled by the change in ownership and management is that a number of Leon’s customers have asked the company to quote new business in the month following the closing of the acquisition. Nonetheless, there remains much work to be done in order to position the business for long-term success, but we are very optimistic about Leon’s prospects and future contributions to Motus.



Kurt Liebich
President and Chief Executive Officer

In September 2013, New Wood Resources was established to purchase Olympic Panel Products LLC (“Olympic”) and Omak Wood Products LLC (“Omak”) from Wood Resources LLC (“Wood Resources”) for $1, plus a commitment to finance the refurbishment and restart of Omak’s production facility. On March 28, 2014, New Wood completed a Bolton of an idled plywood mill in Louisville, MS through New Wood’s newly-established subsidiary, Winston Plywood and Veneer LLC (“Winston”, together with Olympic and Omak, the “Subsidiaries”). Olympic, based in Shelton, WA, is a leading manufacturer of overlay plywood. Its product offering includes both high and medium density overlay panels for concrete forming, sign making and the transportation industry as well as industrial panels with skid resistant, chemical resistant and decorative features for a wide range of industrial and building applications. Omak, based in Omak, WA, produces veneer and began its production restart in October of 2013. Omak was previously known as the Colville Indian Plywood & Veneer Mill. The Confederated Colville Tribes operated the mill from 2002 until 2009, when the harshest decline in the construction industry in 50 years forced its closure. The Subsidiaries employ approximately 375 associates.

During the first quarter of 2015, New Wood showed improvement both operationally and in safety performance. Revenues for New Wood in the quarter increased compared to the first quarter in 2014. New Wood had four recordable incidents, resulting in an RIR of 3.5, which represents a significant reduction from an RIR of 6.7 for the LTM period.

New Wood continued its sequential improvement in financial performance. This progress was driven largely by the first full quarter of profitability at Omak Wood Products LLC (“Omak”) which we restarted in 2014. During the quarter, Omak began producing plywood in addition to veneer and began to optimize the merchandising of its veneer output, which will result in improvement in sales mix and price realization. Work remains on the operational front with a focus on employee engagement, training and curbing absenteeism along with the utilization of information systems, processes and metrics to impact informed decision-making.

Winston Plywood LLC (“Winston”) continued its rebirth. By quarter’s end, all of the prior structure’s debris had been removed, FEMA had agreed to a satisfactory financial package to enable the city of Louisville, MS to rebuild the facility (including the building, outlying log vats and associated infrastructure) and most importantly, Winston has become an integral part of the Louisville community even before having manufactured its first sheet of plywood. In January, ground-breaking on the new plant took place, with Governor Phil Bryant, Mayor Will Hill of Louisville and scores of state and municipal officials together with hundreds of local businesspeople, community residents and state and local media in attendance. In addition, Winston began receiving proceeds from the $10 million grant appropriated last October as part of the financial incentive package from the Mississippi Development Authority. Winston also executed a New Markets Tax Credit transaction, resulting in significant proceeds to the company. Other achievements at Winston during the quarter include hiring key members of the Winston leadership team, obtaining environmental permits and the development of planning procedures and processes which will be critical once production commences.

In March 2015, New Wood sold Olympic to Swanson Group Manufacturing LLC (“Swanson”), a Pacific Northwest forest products company. Ultimately, Swanson intends to relocate the Olympic assets into a new facility currently under construction by Swanson in Oregon no later than the end of June 2016. Until then, New Wood is operating Olympic pursuant to an operations and maintenance agreement. The decision to sell Olympic was made after a strategic review had been performed which considered, among other factors, the anticipated cost-benefit of relocation as Olympic’s Shelton, WA lease was expiring in mid-2016. This transaction represents an important milestone for New Wood as it adds liquidity to the company’s balance sheet and will enable the senior team to focus its attention on Omak and Winston.



Henrik Krabsen Jensen
President and Chief Executive Officer

With roots dating back to 1873, the Pangborn Group provides superior surface preparation solutions through a broad range of wheel-blasting, shot-peening and air-blasting equipment and services. Its products are utilized in an array of industries including aerospace, automotive, defense, energy and foundry. Pangborn Group is comprised of four brands in Europe and North America: Pangborn Corporation in the U.S, V + S – Vogel & Schemmann Maschinen GmbH in Germany, Berger Strahltechnik GmbH in Germany, and Pangborn Europe S.r.l. in Italy. Each of the four companies is a technology leader in the global wheel blast and surface preparation industry, with significant in-house design and engineering capabilities.

The Pangborn Group had one minor lost time accident in Q1 2015. Our trailing twelve month recordable incident rate at the end of March 2015 is 1.3. During Q1, we continued our focus on safety training to ensure safety awareness at all sites, especially at our newer operations in China, Mexico and the UK.

The implementation of Continuous Improvement / Lean projects continues to progress as planned. We are focusing on redesigning a number of our equipment solutions, optimizing the production processes in our foundry, and applying new approaches to the aftermarket business segment. These and several other activities are being implemented and will yield permanent operational and financial improvements in 2015 and beyond. The integration of our newer locations is on-track and quoting volume remains strong. Activity in Mexico has been especially strong with recent new orders on equipment and annual spare part contracts.

Group aftermarket order intake in Q1, historically our weakest quarter, was up from Q4. While the China aftermarket activity was down slightly during the quarter, the result was more than offset by stronger order intake from our other operations in North America and Europe. New equipment orders in Q1 were down after an exceptionally strong Q4, which included booking a nine machine order with a major automotive company.

Overall, Q1 2015 developed ahead of our expectations. While the falling Euro impacted and reduced top-line consolidated sales in Q1 2015, the bottom-line impact was small because our Italian and German operations are naturally hedged with both their product sales and manufacturing costs in Euros.

Market conditions in North America and China continue to be favorable. The European market shows some strengthening, particularly with new project inquiries for equipment replacement and rebuild optimization. Our equipment backlog is at a good level and we expect that the markets will remain relatively strong throughout 2015.



Terry Wagaman
Chief Executive Officer

In June 2006, Phoenix Services International LLC was formed by experienced operators in the mill services sector in partnership with Atlas to acquire Thor Mill Service, Inc. Phoenix Services provides steel mill services, including slag handling, metal recovery, equipment rental and a variety of other related services.

Phoenix Services International LLC reported an OSHA recordable rate of 2.1 for the quarter ended March 31, 2015, compared to the first quarter 2014 rate of 2.2 and the national slag industry standard of 5.0.

Phoenix Services continues to grow its business in many corners of the globe. Phoenix Services is finalizing contract details for a major South American facility. The contract will run for 20-years with an anticipated start-date in 2016. US Steel’s Kosice, Slovakia facility is on track to commence operations with Phoenix Services this summer. Significant capital has been invested by Phoenix Services in Kosice, consistent with plan. Phoenix Services has a very active bidding pipeline and anticipates winning additional sites in the near-term with customers potentially including some of the world’s largest steel producers.

Phoenix Services’ sites are running well, but the steel sector appears to be facing its first headwinds since the Great Recession. According to the World Steel Association, global steel production for Q1 2015 was down relative to Q1 2014. While it is worth noting that the Company’s results are not strictly correlated to the results of the steel industry, these statistics are consistent with the Company’s experience. A handful of sites have ratcheted down production, using the current market softness as an opportunity to take downtime required for major repairs.

The Company continues to focus on operational excellence and attractive growth opportunities, and has the capitalization needed to execute its plans.

Phoenix continues to evaluate new opportunities and specifically is considering multiple opportunities in Latin America. We remain extremely optimistic about the prospective performance and growth at Phoenix Services.



Kurt Liebich
President and Chief Executive Officer

In August 2009, RedBuilt LLC was formed to acquire the assets of the Trus Joist Commercial division of Weyerhaeuser Company. RedBuilt manufactures and designs joists, beams and wood trusses for commercial, industrial and multifamily residential building applications.

The safety of RedBuilt Associates continues to be our top priority. In the first quarter of 2015, one RedBuilt Associate was injured on the job, resulting in a recordable incident rate of 1.4, slightly above our target of 1.0. All safety incidents and near mishaps were investigated, key learnings and trends were shared and corrective actions implemented across the organization. Our 2015 Safety Plan includes actions designed to increase associate involvement in safety, including recognition of risk and encouraging intervention from Associates encountering a potential risk.

The overall level of commercial construction activity trended in positive territory, after a nominal decline in January. The AIA’s Architecture Billings Index (“ABI”) and the Dodge Momentum Index continue to forecast an improvement in commercial construction. The ABI is a leading economic indicator that provides a nine to twelve month glimpse into the future of nonresidential construction spending activity, and the Dodge Momentum Index indicates building opportunity beyond one year. The Dodge data, depicting architectural planning activity, has been exhibiting a saw-tooth pattern of late. December 2014 was up, January down, and February up. The overall trend for the Index continues to be positive indicating a broad-based, yet still moderate recovery in commercial construction.

First quarter quoting and bookings (projects sold) activity is increasing seasonally, though at a slower pace than we expected. Our first quarter “core commercial” quoting activity and the order files are behind from last year, although the order file has increased from the beginning of the year. The key variances to last year’s booking activity are the declines in the number of McDonald’s locations being built and fewer fruit storage facilities in Washington State.

From a financial perspective, net sales for the quarter decreased from the same period in 2014. First quarter gross margins declined from the first quarter of 2014. First quarter unit net realizations remained on par, or slightly ahead of last year; raw material costs are lower, but lower sales and production volumes have created the quarter-to-quarter gross margin variance.

Raw material costs have continued to trend down slightly, though we anticipate that trend to reverse in the second quarter of 2015. Price increases have been announced in anticipation of those rising costs. As overall business activity, and commercial construction activity in particular increases, we expect to see improved financial performance throughout the year.



Karl Meyers

Soundview, headquartered in Elmwood Park, New Jersey, manufactures and distributes bath tissue, towel, napkin and facial products made from recycled and virgin fiber to retailers such as grocery stores, drug stores, office supply and dollar store chains, as well as to wholesale distributors, food service and janitorial supply companies. Soundview commenced operations on April 21, 2012 when it acquired the equity and debt of Marcal Paper Mills, LLC (“Soundview New Jersey”) from Highland Capital Management. During December 2012, the company acquired an additional facility located in Putney, Vermont (“Soundview Vermont”, and together with Soundview New Jersey, “Soundview”).

Soundview remains in the midst of “Soundview turnaround v2.0,” and while significant improvements are underway, bottom line financial performance remains unsatisfactory. The company recorded an RIR of 1.5 for the first quarter of 2015, and 1.3 for the LTM period ended March 31, 2015. Management is committed to achieving world class safety performance and continues to drive employee accountability and safe work practices. Soundview Vermont’s safety performance is particularly noteworthy, as RIR held steady at 0.0 for the LTM, showing marked improvement after a full year RIR of 12.7 at the time of the acquisition in 2012.

The first quarter’s decreased EBITDA relative to the prior year is primarily due to a worse sales mix, featuring fewer converted product sales and a lower net converted product selling price in New Jersey. Specifically, converted products pricing in New Jersey was down relative to the first quarter of 2014. The financial results in the quarter were also held back by higher energy costs, higher labor costs and reduced production due to planned maintenance downtime. On a positive note, Soundview Vermont’s EBITDA improved by more than 50% relative to the first quarter of 2014.

We believe that a number of important initiatives undertaken in the last two quarters will begin to bear fruit throughout the remainder of 2015. Among these initiatives is a reinvigorated S&OP (sales and operations planning) process, which has enabled Soundview to catch up on all outstanding customer orders, leaving previously described service issues behind us. The benefits of this progress are significant; Soundview is no longer paying for expensive outsourced manufacturing of its converted goods and management has reduced temporary labor costs in converting. Further, with enhanced product profitability tools at its disposal, management has been laser-focused on increasing price through mix adjustments and price increases. In addition to working to optimize the current book of business, Soundview is also making progress in the marketplace, landing a sizable order from Walmart which is expected to begin shipping in the second half of the year. In parent roll sales, the company’s new strategy has resulted in the highest sales volume quarter in the last five, while also exhibiting steady increases in pricing.

In operations, the paper machines continued to perform consistently. Management has been reworking various aspects of fiber (raw material) processing, which should result in material cost reductions beginning in the second quarter of 2015. Energy consumption is another area of focus, and management has taken action to reduce certain inefficient practices which were causing increased power consumption. These corrective actions should help drive improved financial performance.



Tim Lowe
Chief Executive Officer

Twin Rivers is an integrated manufacturer of lumber, specialty packaging, label and publishing paper products. The company currently employs approximately 1,060 individuals and operates a paper mill located in Madawaska, Maine, a pulp mill and cogeneration plant located in Edmundston, New Brunswick, and a lumber mill located in Plaster Rock, New Brunswick. Atlas, in partnership with Blue Wolf Capital, acquired a controlling interest in the company in June 2013.

Twin Rivers delivered excellent first quarter financial performance and improving safety trends. RIR during the quarter was 4.0, down from 4.8 in the LTM period. In the first quarter of 2015, the company generated higher revenues and a similar adjusted EBITDA compared to the same quarter in 2014. Sulphite pulp production during the quarter was up over the prior year period, while paper production was also up from the prior year period.

Excellent operating performance occurred notwithstanding a market environment in North America that continued to be challenging. Through the first two months of 2015, industry-wide North American shipments of printing and writing grades declined. In uncoated freesheet, North American operating rates remained the same as imports declined relative to the prior year period. In coated papers, demand for coated mechanical papers continued to fall, while coated freesheet was stable. Notwithstanding market headwinds, the commercial team at Twin Rivers kept all five paper machines in Madawaska sold out during the quarter. Net selling price per ton of paper sold increased over the prior year period and the company continues to capture share in core markets and shift mix to growing packaging and label markets.

The management team is driving Twin Rivers’ transformation into a nimble supplier, providing superior and differentiated service. Management has formalized daily quality reviews with the operations teams and is implementing an 80/20 approach to providing the best service to the company’s most important customers. Looking forward, management is focused on the long-term strategic challenges posed by Twin Rivers’ largest paper machine, whose publishing grades are in secular decline. The team is assessing investment opportunities that can expand production capabilities and expedite Twin Rivers’ transition to non-publishing markets.

Operations at Plaster Rock improved during the quarter. Production rate increased sequentially quarter-over-quarter. Significant capital investments made towards the end of last year, such as the new saw mill in-feed system and planer mill high grader, created short-term hurdles during the first quarter as employees were trained on new processes and equipment; however, we expect that these investments will ultimately facilitate production efficiencies and increase Plaster Rock’s mix of premium lumber products. While it has taken longer than originally expected to effect the turnaround of the lumber operation, we are confident that Plaster Rock will become a primary source of value creation over the coming years.


Our Atlas Foundation Partner


Tara Russell
Founder and CEO

Create Common Good (CCG) uses food to change lives and build healthy communities. We broadly impact communities through our training and feeding programs. We provide job training and employment to a broad base of populations with barriers to employment, youth development programs, and a wide variety of healthy food access programs. Create Common Good (CCG) is a non-profit social enterprise that offers food service staffing talent, food products and food services to institutional food service customers. We differ from other nonprofits in that our goal is to build a sustainable and replicable model that does not rely exclusively on grants and donations to fuel our growing impact model.

CCG’s job training program has scaled by 25-50% in trainee volume and continues to place over 90% of our graduates into employment. Trainees come into the program making ~$1 on average (most making none) and graduate making between $9 and $10 on average, a significant demonstration of their path to financial independence. We continue to serve women at risk, homeless individuals, refugee populations, the formerly incarcerated, and anyone who struggles with a barrier to employment.

We’ve greatly expanded our food production business through our largest customer, Jacksons Food Stores, now located across the entire West region. Our newest large volume product is convection oven breakfast and lunch options that are frozen and protein based, thanks to our USDA certification and growing national footprint. Additionally, we’re working on new business with Albertsons Grocery Retail stores, and targeting national opportunities within their Supervalu family of grocery retail brands. We’ve welcomed Steph’s Seriously Good Salsa as a new customer, taking on all her production as she grows her product footprint and sales regionally and potentially nationally.

Thanks to the generosity of our Atlas family and community, along with the tremendous support of the Boise community, we were able to again pay off Phase 2 production kitchen major expansion earlier this quarter. We’ve doubled our food production space and greatly expanded our food storage capabilities, allowing us to take on continued larger volume customer opportunities. For more information or to donate, please visit